Permits Please: The Trump Effect
At every stage of the exploration process, from prospecting to opening a mine, there are regulations to follow and hoops to be jumped through. The regulations themselves are pretty dry and quite similar jurisdiction to jurisdiction. The interesting part is the “environment” in which the regulations are interpreted and the permits issued. In some jurisdictions, delay rather than denial is the norm, "We never say no to your mine, but we never say yes either."
I have interests in three companies waiting on permits: Bayhorse Silver (BHS.V) in Oregon, US Copper (USCU.V) in California and Canadian Critical Minerals (CCMI.V) in British Columbia. Each trades at a substantial discount from the value it would have if it had permits in hand.
If BHS was 5000 feet across the Brownlee Reservoir in Idaho or USCU was 50 miles to the east in Nevada their permitting stories would be entirely different; but they are not and both are in jurisdictions seen as generally mining unfriendly. CCMI, in British Columbia, is in a friendlier jurisdiction but there are still hoops to jump through.
Critically, all three projects are what is known as “brownfield” which is to say that all of them have been permitted, working mines at some point in the past. Bayhorse was mining just a couple of years ago. CCMI’s Bullriver mine was an operating mine as recently as 2009. USCU’s Moonlight-Superior Project’s mining history ended considerably earlier in 1930. The point being that none of these mines are in untouched wilderness. They all have a history.
Until quite recently, brownfield status, history, didn’t matter much in the process. Obviously new, higher, environmental standards have to be met and “social licence” and First Nation consultation have been thrown into the mix in British Columbia. But the main obstacle to gaining permits has been a general disinclination of government to issue them. This is, frankly, purely political and subject to changing political winds.
Which creates a significant investment opportunity if you manage to read the winds right. Each of the companies I mentioned is trading at less than $0.10. Were any of them to actually receive their permits they would be much more valuable. BHS would start mining and milling its silver with the extra 10% copper credit. CCMI would restart its mill and process all of its 180,000 ton surface stockpile of copper bearing rock while preparing to resume underground mining operations. USCU would be all the more attractive to a major looking to recover its 43-101 resource of 1.5 billion pounds of copper at the Moonlight deposit. All three companies would move forward, fast.
Political meteorology is tough. However sometimes things happen which change the entire climate. The election of Donald Trump was one of those things. Trump has indicated he wants the US to become more self-sufficient in basic materials production including copper. (As I was writing this piece the White House put out an Executive Order “Immediate Measures to Increase American Mineral Production”.) Good news for USCU. Goodish news for Bayhorse, which has recently, following on the heels of Hercules Metals (BIG.V), become something of a copper story in both Oregon and Idaho. CCMI? Oddly, good news for a Canadian company as well.
CCMI’s permitting may well be fast tracked as part of the BC Provincial government’s response to the Trump tariffs. It suddenly occurred to the current Premier, David Eby, that whatever Trump’s tariffs turn out to be, they represented a huge economic challenge to BC. In early February, Eby released a list of 18 projects in mining and energy which he wants the BC government to “fast track”. The Mining Association of British Columbia, says in a statement that the association is pleased the government recognizes the need to speed up permitting and calls the initial list released earlier this week as “a good first step.” CCMI is not on that list as its permitting applications have not yet been submitted, but the existence of a “fast track” list in itself is a huge step towards changing a “go slow” environment which has made permitting a years long process in BC. A brownfields project with decent First Nations support - which CCMI has - might well see a permit within a year of submission.
USCU has an updated 43-101 Preliminary Economic Assessment. CEO Steve Dunn is shopping for a Joint Venture Partner. The advent of the Trump tariffs has meant that copper produced in the US has become much more attractive which, in turn, means that the pool of potential partners has become bigger. Mine permitting is the big issue. California has very strict environmental regulations which must be met. But those are technical, the real hold ups can come during and as a result of the required rounds of public consultation.
USCU had the advantage of being in the fairly empty, mining friendly, north eastern corner of the Golden State so the required public consultation should not pose any insurmountable issues. Modern mining builds environmental safety into the mine plan from the go. The knee jerk anti mining reactions from the environmentalists may be muted in the face of real economic opportunity.
For BHS.V, which has completed all of the steps required to gain a permit for the Bayhorse Mine and is just awaiting the final results from the water test holes it had drilled. Those results should be in hand in the next couple of months. The final hoops will have been jumped and now the company waits. Oregon’s DOGAMI, the mining regulator, has been notorious for slow walking mining permits to please the coastal environmentalists. Will that continue? It is very much an open question and how much effect the Trump Executive Order will have is difficult to determine.
The one thing BHS has in its favour is that along with the silver at the Bayhorse mine there is also copper and antimony - a strategic metal. There will certainly be encouragement from the Federal government to expedite the Bayhorse permits. The US Department of Defence is more than a match for DOGAMI. A slow walk might be transformed into a jog, if not a sprint.
All three companies will benefit from a more “relaxed” and encouraging permitting mind set. The possibility of upside surprises is much brighter than it was a month ago.
(Disclaimer: I hold positions in CCMI.V, BHS.V, USCU.V and BIG.V I may buy or sell at any time. This is not investment advice. Do your own due diligence. Call the CEO.)